Dec.28
2016

Oil imports inflate US trade deficit to widest in nine months

America’s trade deficit grew to its widest in nine months in October as net imports from China and the European Union increased by nearly $3 billion.

The trade deficit grew to $48.7 billion, more than the $47.4 billion expected, as exports stalled and the price of oil imports climbed. The deficit was also revised up in September, to $44.9 billion from $43.5 billion.

A country’s trade balance represents the difference between the amount of goods and services it buys and sells overseas. America’s deficit means that it is importing more than it is exporting, which can hinder economic growth.

Trade experts have warned that President Trump’s protectionist policies will reduce the amount the US exports and will widen its trade deficit. The president has pulled the US out of one big international free-trade agreement and threatened to ditch another since taking office, believing them to be against American workers’ interests.

The US was in advanced talks with the EU over a free-trade agreement before Mr Trump took office, but has yet to re-engage since. Mr Trump also has challenged China on several fronts over alleged unfair trade practices.

America’s trade deficit with China widened by $600 million in October to $35.2 billion, and its deficit with the EU widened by $2.3 billion to $13.7 billion.

Michael Pearce, at Capital Economics, said: “It seems likely that imports will outpace exports in the fourth quarter, meaning net trade will be a small drag on economic growth. We think export growth should rebound over the coming months.”

Exports in October were roughly flat at $195.9 billion. Capital goods, which account for most exports, dipped by $1.2 billion to $43.9 billion, reflecting a $1.1 billion drop in aircraft orders. Imports rose 1.6 per cent to $244.6 billion, mainly owing to the higher cost of oil.

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